“We have made tremendous progress in recent months with the development
of our second-generation bioengineered organ implant products”

“We have made tremendous progress in recent months with the development
of our second-generation bioengineered organ implant products,” said Jim
McGorry, Chief Executive Officer of HART. “I took this job because I
deeply believe in HART’s technology, my ability to add value, and our
commitment to patients and shareholders. HART has evolved from a
research bioreactor company working with a single external surgeon to an
integrated biotechnology company collaborating with recognized leaders
in regenerative medicine like Mayo Clinic and Connecticut Children’s
Medical Center. We are poised to make significant further progress over
the coming 18 months, including key preclinical and regulatory
achievements.”

Business Overview

Our central focus continues to be the development of bioengineered
organs for life-threatening conditions. HART has built a dedicated
internal team of materials scientists, engineers and biologists who are
working with our collaborators at Mayo Clinic and Connecticut Children’s
Medical Center to bring our products to the patients who need them as
quickly as possible.

For the past several months our scientific efforts have focused
primarily on making sure that we addressed the body response issues
encountered by our first-generation trachea product design. Our
second-generation scaffold is engineered to better guide the repair of
tissue during the body’s natural healing process. We started by
selecting a different chemistry for the scaffold and refined several
microstructural properties as well. We have done considerable work and
extensive mechanical and biological testing of our second-generation
scaffold. As a result, we believe that we have developed the right
combination of product characteristics to restore the function of the
airways or the esophagus and to guide the repair of the patient’s own
tissue by the body’s natural healing process.

We look forward to confirming the improvements in our second-generation
platform by conducting large-animal studies at Mayo Clinic along with
their team of regenerative medicine experts. We expect to conduct 30-day
in-life studies in the fourth quarter that will provide the key data to
determine if our second-generation scaffolds are ready for use in
patients.

“We believe positive results from these studies would support the use of
a second-generation product in compassionate use surgeries,” said
Saverio La Francesca, M.D., Chief Medical Officer and Executive Vice
President of HART.

The intended use of our first-generation product was for diseases of the
trachea. As our development team was designing and testing improvements,
we refined several properties so that the same fundamental product
design could be used for additional indications such as the bronchi and
the esophagus. This multi-indication or platform approach is intended to
allow a sophisticated but single product design to guide the repair of a
patient’s own tissue in three different indications. This efficient use
of resources has the potential to expand our market opportunity
significantly. Over the upcoming months we will continue to explore the
development and regulatory pathway for each indication. We believe the
versatility and efficiency of our platform approach will add
considerable value to our development opportunities.

Assuming we receive positive data from the preclinical studies with Mayo
Clinic, we expect to file an Investigational New Drug (IND) application
with the U.S. Food and Drug Administration (FDA) and a Clinical Trial
Application (CTA) with the European Medicines Agency (EMA) for our first
indication coming from our bioengineered organ implant platform during
2016.

Given the significant improvements to our platform, we expect to file an
amendment to our current orphan drug designation with the FDA, which was
granted for the HART-Trachea in September 2014. Additionally, we expect
to file our orphan drug application with the EMA for the
second-generation product in 2016. Over the upcoming months we will
continue to evaluate and advance the preclinical and regulatory filing
requirements for the different indications of our bioengineered organ
implant platform.

Jim McGorry continued, “I am excited about our potential value-creation
opportunities over the upcoming 18 months. We have made tremendous
progress and we have a plan for bringing our potential life-extending
platform to patients.”

Financial Update

Cash used in operations in Q2 2015 - $2.0 million

Cash used in operations YTD - $3.7 million

Second Quarter Reported Results

Net loss was $4.5 million, or $0.44 per diluted share, for the three
months ended June 30, 2015 compared to a net loss of $2.5 million, or
$0.32 per diluted share, for the same period in 2014. The unfavorable
year-to-year quarterly net loss comparison was primarily due to a $2.1
million increase in non-cash stock-based compensation expense related to
the acceleration of vesting and extension of stock options made to David
Green, the Company’s former CEO, at the time of his resignation in April
2015 in accordance with his employment agreement.

For the three months ended June 30, 2015, the Company used net cash of
$2.0 million for operations, and used $15,000 for capital expenditures.
At June 30, 2015, the Company had cash on hand of $10.1 million and had
no debt.

Year-to-Date Reported Results

Net loss was $7.1 million, or $0.74 per diluted share, for the six
months ended June 30, 2015 compared to a net loss of $5.5 million, or
$0.71 per diluted share, for the same period in 2014. The unfavorable
year-to-year net loss comparison was primarily due to a $2.1 million
increase in non-cash stock-based compensation expense, primarily related
to the acceleration of vesting and extension of stock options made to
David Green, the Company’s former CEO, at the time of his resignation in
April 2015 in accordance with his employment agreement partially offset
by a decrease of $0.5 million in stock-based compensation to other
employees.

For the six months ended June 30, 2015, the Company used net cash of
$3.7 million for operations, raised $8.6 million in net proceeds in an
equity offering and used $21,000 for capital expenditures.

Frequently Asked Questions (FAQ)

Q: What are the improvements of the second-generation product over
the first-generation product?

A: We started by selecting a more elastic material for the scaffold, and
refined several microstructural properties to minimize the likelihood of
eliciting a negative response from the body toward the product. We also
changed the type of cell that we seed onto the scaffold prior to
implantation, though we still use the patient’s own cells. This cell
type will better guide the patient’s natural healing processes and
should therefore lead to better incorporation of the implanted product
into the tissues surrounding it. We believe that this refined
combination of product characteristics will lead to a better
regenerative response from the body, leading to a more natural
restoration of organ function than we observed with the first-generation
scaffold.

Q: When will HART’s product next be used in humans?

A: We expect to conduct preclinical studies examining our
second-generation platform products with Mayo Clinic in the fourth
quarter of 2015. We will be able to evaluate the impact that the new
design has on modulating the body response that follows any implant,
consistent with the biological activity of the product. By design, these
types of studies are meant to provide relevant information and the
initial perspective necessary to advance our second-generation products
into clinical trials. The preclinical work will also provide a strong
foundation for subsequent development and we are moving ahead
accordingly. We expect that a positive outcome of these studies and our
ongoing internal work will give us a very clear path to support U.S. or
European hospitals in doing compassionate use cases in people.

Q: What do you mean by “product platform”?

A: As we worked to improve the first-generation trachea product, we
changed the product’s design significantly. In doing so, we moved to a
more sophisticated design that we believe will allow us to treat
conditions of the bronchi and esophagus, in addition to conditions of
the trachea, with the same product design. This multi-product or
multi-indication treatment capability with the same product design is
what we are referring to as a product platform.

Q: Give the platform approach, is the trachea still expected to be
the first indication?

A: We believe that our second generation platform shows great potential
in three indications for treating conditions of the trachea, bronchi and
esophagus. The completion of our initial preclinical studies with Mayo
Clinic will provide clarity as to which product would allow HART to
bring our life-saving technology to the greatest number of patients in
the shortest amount of time.

Q: Is HART still working with Dr. Macchiarini?

A: No, there is no ongoing relationship between HART and Dr.
Macchiarini. We discontinued our collaboration with Dr. Macchiarini
approximately one year ago and have not worked with him since that time.

Conference Call Information:

The Company will host a conference call today at 5:00 p.m. ET to discuss
its second quarter financial results and operations. On that call,
management may respond to questions from the audience on any of a number
of topics related to the business, including clinical and preclinical
research, operations, plans and outlook. The live conference call is
accessible by dialing toll-free 877-407-8293, or toll/international
201-689-8349, and referencing Harvard Apparatus Regenerative Technology,
Inc. An audio webcast will also be available at http://public.viavid.com/index.php?id=115675.

If you are unable to listen to the live conference call, a replay will
be available within approximately 3 hours from the end of the call
through 11:59 p.m. ET on August 20, 2015 and will be accessible by
dialing toll-free 877-660-6853, or toll/international 201-612-7415, and
referencing conference ID “13615845”. The replay will also be made
available at the web link above and on the company’s web site, www.harvardapparatusregen.com.

About Harvard Apparatus Regenerative Technology

Harvard Apparatus Regenerative Technology is a biotechnology company
developing bioengineered organs for life-threatening conditions. The
Company’s technology initially is focused on restoring organ function to
a patient’s airways or esophagus.

Forward-Looking Statements

Some of the statements in this press release are "forward-looking" and
are made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. These "forward-looking" statements in
this press release include, but are not limited to, statements relating
to the regulatory approval of the HART-Trachea or any other HART
products, by the FDA, EMA, MHRA or otherwise, which approvals may not be
obtained on a timely basis or at all, success with respect to any
collaborations, clinical trials and other development and
commercialization efforts pertaining to HART’s products including our
HART-Trachea and any other product pertaining to the airway or
esophagus, which such success may not be achieved or obtained on a
timely basis or at all; anticipated future earnings or other financial
measures, and the continued availability of a market for the HART
securities; any continued benefits of our spin-off from Harvard
Bioscience. These statements involve risks and uncertainties that may
cause results to differ materially from the statements set forth in this
press release, including, among other things, our ability to obtain and
maintain regulatory approval for the bioreactors, scaffolds and other
devices and product candidates we pursue; the success of our clinical
trials and device; our inability to operate effectively as a
stand-alone, publicly traded company; plus other factors described under
the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2014 or described in our other
public filings. Our results may also be affected by factors of which we
are not currently aware. The forward-looking statements in this press
release speak only as of the date of this press release. Harvard
Apparatus Regenerative Technology expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to such
statements to reflect any change in its expectations with regard thereto
or any changes in the events, conditions or circumstances on which any
such statement is based.